Analysts at Water Tower Research LLC noted that Gevo Inc (NASDAQ:GEVO) is still in a pre-revenue stage but it expects to start generating biogas revenues from its renewable natural gas (RNG) plant in the second quarter of 2022 along with the sale of credits in the second half of this year.
On February 24, 2021, Gevo announced fourth-quarter 2021 earnings results. Revenues were $0.1 million for the quarter compared to $0.5 million in 4Q20. Cash was $475.8 million – which includes restricted cash and marketable securities, down from $522.4 million in 3Q21, attributable to the construction of the RNG and Net-Zero 1 plants.
READ: Gevo ends 4Q with $475.8M as progress continues on its Net-Zero 1 Project
During the quarter, Gevo entered into several agreements to strengthen its supply chain as well as cement visibility of revenues through offtake deals. This includes agreements with Kolmer, Axens, Sweetwater Energy, and ADM, analysts noted.
During 2021, Gevo invested significant capital in its preliminary and advanced-stage projects, including approximately $23 million into the flagship Net-Zero 1 project, $52 million into Northwest Iowa RNG and other capital projects, and $12 million into strategic IPs.
Gevo is targeting Net-Zero 1 to be complete in late-2024 and operational in 2025. The total cost of the project is estimated to be around $900 million with $150-200 million annual earnings before interest, tax, depreciation, and amortization (EBITDA) is expected, said analysts.
The company recently made the decision to use ethanol fermentation technology instead of isobutanol fermentation technology to produce sustainable aviation fuels (SAF) at Net-Zero 1 owing to increased productivity, lower capital costs, and process guarantees from Axens.
In December 2021, Argonne National Laboratory (ANL) reported that its preliminary findings were consistent with Gevo’s net-zero life-cycle emissions claim for the Net-Zero 1 project when measured using ANL’s GREET Model (greenhouse gases, regulated emissions, and energy use in technologies model).
Gevo expects the RNG project to generate about $16-22 million earnings before interest, tax, depreciation anmd amortization (EBITDA) per year by 2023.
Gevo's mission is to transform renewable energy and carbon into de-fossilized, energy-dense liquid hydrocarbons. These liquid hydrocarbons can be used for drop-in transportation fuels such as gasoline, jet fuel, and diesel fuel that, when burned, have the potential to yield net-zero greenhouse gas emissions when measured across the entire lifecycle of the products.
Contact Ritika at ritika@proactiveinvestors.com